Determinants of Currency Crises in Turkey Some Empirical Evidence

Abstract

Currency crises have become a serious threat for developing countries, especially since the financial deregulation process and the collapse of the Bretton Woods system. In the past two decades, Turkey has experienced two major currency crises. This study aims to predict the determinants of currency crises in Turkey by using an ordered probit model. According to the results, short-term debt/GDP, real exchange rate, deposit interest rates, foreign exchange reserves/imports, and credit/deposit variables are all significant in explaining currency crises in Turkey.